Crude Oil Surges To End Well Above $106 On Supply Data

(RTTNews) - U.S. crude oil soared 3 percent to end at a near sixteen-month high Wednesday, after an official Energy Information Administration weekly oil report showed U.S. crude oil inventories to have declined more than three times what analysts estimated. This is the highest level oil prices have scaled since March 2012. Oil also found support with the ongoing political turmoil in Egypt, fueling concerns the situation could disrupt oil shipments through the Suez Canal.

The Energy Information Administration's weekly oil report showed U.S. crude oil inventories to have plunged 9.90 million barrels for the week ended July 5. Analysts expected crude oil inventories to drop 2.90 million barrels last week. Meanwhile, gasoline stocks shed 2.60 million barrels in the same period, with analysts expecting a decline of 0.20 million.

The OPEC in its monthly oil market report released today said it sees little change in global oil demand growth in 2013, while noting that world oil demand is projected to grow at a higher rate of 1.0 mbd to average 90.7 mbd in 2014.

Light Sweet Crude Oil futures for August delivery, the most actively traded contract, surged $2.99 or 2.9 percent to close at $106.52 a barrel on the New York Mercantile Exchange Wednesday.

Crude prices for August delivery scaled a high of $106.66 a barrel intraday and a low of $104.21.

Yesterday, oil settled higher tracking rising global equity markets despite the dollar strengthening against a basket of major currencies. Investors were focused on the increasingly fluid situation in Egypt, with fears of supply disruption through the Suez Canal, a major shipping route.

Tuesday after the market hours, the API said U.S. oil inventories fell by 9 million barrels in the weekended July 05, well above the decline of 3.8 million barrels analysts expected. Gasoline stocks were down 3.5 million barrels, the API said.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 84.07 on Wednesday, down from 84.64 late Tuesday in North American trade. The dollar scaled a high of 84.73 intraday and a low of 84.11.

The euro traded higher against the dollar at $1.2883 on Wednesday, as compared to $1.2781 late Tuesday in North America. The euro scaled a high of $1.2862 intraday and a low of $1.2766.

In economic news from the U.S., the Commerce Department said wholesale inventories fell by 0.5 percent in May following a revised 0.1 percent decrease in April. The drop surprised economists, who had been expecting inventories to rise by 0.3 percent compared to the 0.2 percent increase originally reported for the previous month.

From the eurozone, Germany's EU harmonized inflation accelerated in June as initially estimated, final data released by the Federal Statistical Office showed. Inflation as per the harmonized index of consumer prices increased to 1.9 percent in June from 1.6 percent in May. The outcome matched the preliminary estimates.

Elsewhere, China posted a merchandise trade surplus of $27.1 billion in June, but were below economists' forecast of a surplus $27.8 billion. Exports were down 3.1 percent from a year ago, below estimates for an increase of 3.7 percent. Imports dipped an annual 0.7 percent compared to forecast of a 6 percent jump.